Macquarie is leaning into its role as a challenger bank at a time when the major lenders are preparing to show investors how they are handling softer margins and rising competition. The group has steadily repositioned its retail arm around simple digital banking, high-visibility interest rates and a broker-led approach to home loans, using technology to scale without a sprawling branch network. This shift has helped it quietly emerge as a serious alternative for customers looking for better value on savings and sharper service on mortgages.
Behind the scenes, the bank’s retail division is generating a return on equity of about 13%, comfortably above its cost of capital. This gives it room to keep investing in growth. New digital tools have allowed Macquarie to cut headcount by around 24% over two years, or about 600 roles, even as its home loan book has expanded by roughly 50%. That efficiency push has driven its cost-to-income ratio down to about 47%. The bank is revealing this figure for the first time and it positions the business to sustain competitive deposit and mortgage pricing.
On the funding side, Macquarie has just passed a key milestone, with household deposits in Australia topping $100 billion for the first time, after growing about 3.6% in December alone. This was more than double the system-wide pace. Its share of transaction and savings balances has climbed to around 7% but its slice of term deposits is still only about 1%. It now wants to lift that materially. Regulators note that Macquarie’s aggressive stance in deposits is already forcing rate changes to flow through more quickly and is putting pressure on rivals that rely heavily on low-interest or standard savings accounts.
In home lending, Macquarie’s market share has reached roughly 6.8%. This is supported by turnaround times that are generally faster than many large competitors and a more conservative credit approach, with serious arrears tracking below major bank levels. Most of its mortgages come via brokers rather than proprietary branches. This is a deliberate contrast to big lenders that prefer to drive more business through their own channels. The bank also stresses that its customer base is not limited to affluent city postcodes, with almost one in five customers living in regional areas and hundreds of regional postcodes served by accredited brokers. This suggests its brand is broadening beyond a niche metropolitan image.
Taken together, Macquarie’s strategy could reshape the competitive landscape in deposits and mortgages, especially if it keeps pairing sharp savings rates with efficient digital service and broker partnerships. The big four banks seem likely to face more pressure on their net interest margins as customers chase better returns on cash and faster loan approvals. How far they respond on pricing and how sustainable Macquarie’s growth remains if funding costs rise are still open questions that markets will be watching closely.
